This report is read as follows:
Northbell, the main body of cosmetics contract manufacturing business of 23Q3 company, turned from loss to profit and ushered in a profit inflection point. With the gradual recovery of cosmetics consumers and the gradual clearance of small and medium-sized factories, the company's performance is expected to pick up steadily.
Main points of investment:
Investment suggestion: considering the weak terminal demand for cosmetics, the EPS forecast for 2023-24 will be reduced to-0.100.37 / 0.300.19,0.47 yuan for 2025 EPS will be added, and the target price will be lowered to 6.0yuan according to the comparable company's 20xPE in 2024. maintain the overweight rating.
Northbell turned the deficit and the performance inflection point appeared. From January to September 2023, the company's revenue was 1.441 billion yuan,-32.73% compared with the same period last year, and the return to mother / deduction non-net profit was-0.64 billion yuan respectively, of which the revenue of Northbell, the main body of cosmetics contract manufacturing business, was 1.435 billion yuan,-1.38% from the same period last year, and the net profit at home was-0.51, significantly reducing losses by-61.26% compared with the same period last year. 23Q3's revenue was 517 million yuan,-28.79% compared with the same period last year, and the return to the mother / deduction of non-net profit was basically even, of which Northbell's revenue was 515 million yuan, year-on-year + 3.53%, and the net profit was 3 million yuan, turning a loss into a profit in a single quarter. 23Q3's gross profit margin is 12.50%, year-on-year + 7.62pct, month-on-month + 1.02pct continues to improve.
Cosmetics business bottomed out and rebounded, and operating efficiency improved. Northbell 23Q1-Q3, the main body of the cosmetics contract manufacturing business, grew by-9.65%, 0.87%, 3.53%, respectively. After about two years of revenue decline, it returned to positive growth since 23Q2, mainly due to industry repair and the company's active expansion. In the same period, the company actively carries out cost control and personnel optimization to promote the improvement of operating efficiency, until the 23Q3 homing net profit turns around, and the profit is expected to continue to improve with the growth of revenue scale.
Industry clearing is expected to accelerate, leading share is expected to increase. Since 2022, the retail of cosmetics terminals is weak, and at the same time, a number of white brands and cutting-edge brands are facing operational difficulties. It is expected that small and medium-sized contract manufacturers are expected to accelerate clearance. As the industry leader, the company is expected to optimize the customer structure in this process and continue to increase market share.
Risk tips: orders are lower than expected, important customers are lost, and raw material costs are rising.